Home Loan Affordability Calculator
Car loans, student loans, credit card minimums, child support.
Most you could borrow against
$287,285
A loan of $247,285 on top of your $40,000 down payment.
- Principal & interest$1,563.01
- Property tax$263.34
- Home insurance$150.00
- Mortgage insurance$123.64
- Total each month$2,100.00
How this was worked out
- Rule applied28 / 36 rule of thumb (US)
- Monthly allowance$90,000 a year ÷ 12 = $7,500.00 gross a month, of which this rule allows $2,100.00 for housing
- Less the other costs$2,100.00 − $536.99 of tax, insurance and mortgage insurance at 0.6% = $1,563.01 for the loan
- What that borrows$1,563.01 a month at 6.5% over 30 years = $247,285, plus $40,000 down = $287,285
The limit here is your housing ratio: it caps housing at $2,100 a month. Interest is compounded monthly (united states).
The most a rule will permit, which is not the same as the most you should spend. Every ratio here is measured against gross income, so a payment that reads as 28% of what you earn is a considerably larger share of what reaches your account once tax and payroll deductions come out. Property tax, insurance and any condo fee stay at the figures you entered, and all three tend to rise over the years while a fixed-rate payment does not. Nothing above sets money aside for maintenance, which a house needs whether or not the budget has room for it.
This is what a rule of thumb allows, not what a lender will offer. Every limit here can be exceeded with a strong credit file, reserves or a larger down payment, and none of them know what your life costs. Closing costs, moving and furniture come on top of the down payment.
The worked examples below are in US dollars. The tool itself works in whichever currency you pick above, and never converts between them — what you type is what it does the arithmetic on.
There is no single answer, because there is no single rule
Affordability is decided by whichever rule your lender applies, and the rules disagree by a hundred thousand dollars on the same income. This tool implements five of them rather than picking one and calling it the truth.
- The 28/36 rule of thumb: housing takes at most 28% of gross monthly income, and all debt including housing at most 36%.
- HUD’s FHA benchmark ratios of 31% and 43%, which a lender may exceed with documented compensating factors.
- Conventional underwriting, which caps total debt rather than housing alone and commonly reaches 45%.
- Canada’s CMHC limits: 39% gross debt service and 44% total debt service, qualified under the stress test.
- The UK approach, which sizes the loan as a multiple of income — 4.5× being the level the Bank of England’s flow limit is written around — rather than as a share of monthly pay.
A worked example: $90,000 a year and $40,000 saved
Take a $90,000 income, $550 a month of existing debt payments, $40,000 down, a 6.5% rate over 30 years, property tax at 1.1%, $1,800 a year of insurance and mortgage insurance at 0.6%. The five rules answer:
- 28/36 rule: $287,285 — the housing ratio binds first, capping the monthly cost at $2,100.
- FHA 31/43: $316,365, on a $2,325 monthly allowance.
- Conventional at 45%: $380,987, where the total debt ratio binds and the existing $550 is what limits it.
- Canada: $324,750, on a $2,750 allowance under TDS.
- UK at 4.5× income: a $405,000 loan, so $445,000 with the deposit.
The spread between the most and least generous is over $150,000 on identical facts. The Canadian figure is priced at 8.5% rather than the 6.5% typed in, because the stress test asks whether you could still pay at your rate plus two points. The payment you would actually make is $2,374, comfortably under the $2,750 allowed.
Working the price back from the payment
The monthly allowance comes first, then the price is solved backwards from it — which is harder than it sounds, because two of the costs inside that allowance depend on the price. Property tax is a percentage of the value and mortgage insurance a percentage of the loan, so the equation has the answer on both sides. It is rearranged and solved directly rather than guessed at.
Mortgage insurance also makes the cost curve jump rather than bend: one dollar over the 80% loan-to-value line and a new monthly charge appears from nothing. On a $120,000 income with $85,000 saved, the answer is exactly $425,000 — the largest price that keeps the deposit at 20% — and the cost there is $2,689 against an allowance of $2,800. The unspent $111 is not an error: anything more expensive triggers insurance costing more than the allowance has left.
What a ratio cannot see
Every rule here works from gross income — before tax, before pension contributions, before health insurance — and none of them know what your life costs. Childcare, a long commute, medical bills and supporting a relative are all invisible to a debt-service ratio, and all of them come out of the same money.
The output is a ceiling rather than a target. Borrowing the maximum leaves nothing for a broken boiler, a lost job or a rate reset — and closing costs, moving and furnishing arrive immediately after the deposit, when the account is at its emptiest.
Stress rates, debts and income multiples
Why does the Canadian option quote a rate I did not type?
That is the stress test. Federally regulated Canadian lenders qualify a borrower at the greater of the contract rate plus two percentage points and 5.25%, so the tool sizes the loan at that rate while showing the payment you would really make.
What counts as a monthly debt payment?
Car loans, student loans, personal loans, the minimum due on credit cards, child support and alimony. Utilities, groceries, insurance premiums and anything you could stop paying tomorrow are generally not counted, which is exactly why the ratio flatters you.
Why does the UK use a multiple of income instead of a ratio?
It caps the size of the debt rather than the size of the payment, so the answer does not move every time interest rates do. Affordability at the payment level is then checked separately, including against a higher stressed rate.
Does a larger deposit raise what I can borrow?
It raises the price you can reach rather than the loan you qualify for, because the ratios cap the payment and the payment sizes the loan. Crossing the 80% line also removes mortgage insurance, which hands part of the monthly allowance back and buys more house than the deposit alone accounts for.
Gross income or take-home pay?
Gross, because that is what every rule here is written against. It is also why the ceiling flatters you: the tax and pension contributions taken before the money arrives are invisible to a debt-service ratio.